None, if those countries and cities merely mimic to become a Silicon Valley look-alike.
One should not copy Silicon Valley because it has gradually grown into a unique ecosystem that requires all of its parts to fire on all cylinders. Just a few pieces of the ecosystem makes for warm-and-fuzzy press coverage but fails to secure an engine of innovation.
A considerable amount of money – to feed innovation – has been spawned by some substantial early successes at the beginning of the technology industry, and put Silicon Valley on the map. It is now tacitly (I’ll explain) supported by a variety of asset managers, money managers from endowments, insurance companies, pension funds, etc. with many billions in assets under management with a fraction of a single digit percentage of all assets under management (AUM) allocated to venture (firms). They insert the money they can afford to lose.
For a country or city to become the next hub, it needs to attract sufficient capital, outlier arbitrage of innovation and a corporate, societal, and customer appetite for risk-taking. So, to copy Silicon Valley’s example would require the same form of capitalism, risk-taking, and money (entrepreneurs will follow the money) as Silicon Valley. Few places in the world have all such ecosystem parameters in place. Many will try.
The reason why I write tacit support by limited partners is that the success rate of venture-capital firms, on the whole, has been terrible and is extremely unevenly distributed. I would venture to say a handful of VC firms in Silicon Valley (as confirmed by a well-known asset manager) produce consistent, monolithic, venture-style returns to their investors. Most of venture capital has turned subprime by deploying private-equity risk profiles that are unlikely to generate venture-style returns, ever. With crowd-based innovation arbitrage as the next level of sub-priming. A few outliers are producing massive financial returns, like Facebook and the likes, keeps the fire of Silicon Valley burning.
Which leads me to the question posed.
The strategy to create the next hub of innovation should not be to copy Silicon Valley but to pursue its antithesis. To build an ecosystem for prime innovation with renewable socioeconomic value to the evolution of mankind. With a deliberate focus on long (compatible with the innate assets of more mature societies) rather than the quickly evaporating valuations of short sold to innocent greater-fools.
Elon Musk confirmed what I have been saying for years, venture capital as the arbitrage of innovation in Silicon Valley is severely broken. A reason why he had to provide most of his early runway for Tesla himself. A new hub of innovation must begin with the financial support that embraces real entrepreneurs to drive socioeconomic problems and advancements the world truly cares about, away from the dumb and obsessive fixation on the harvesting of advertising clicks.
So to answer your question, the new innovation hub of the future will be in a country or city that understands the true meaning of innovation, correlated to evolution, and is not afraid to deploy the risk of it.
Do not count our little country – the U.S. – out just yet, as Churchill said:
“The U.S. will always pursue all other options before it does the right thing”.
Read this week’s press, and you may read between the lines how the race for the disruption of venture capital has begun. Thanks to Bill Gates.